On March 1, the Strengthening Motor Vehicle Safety for Canadians Act (Bill S-2) (the Act) received royal assent, giving Canada’s minister of transport sweeping authority to execute a range of measures designed to protect drivers from vehicle defects.

According to a press release issued by Transport Canada, these powers include the ability to:

  • Order a company to recall a vehicle to correct a defect;
  • Order a company to pay for the cost of repairs so consumers don't bear the cost;
  • Order a company to conduct tests on a vehicle and to provide the results back to the minister;
  • Order a company to fix a new vehicle before it's sold; and
  • Negotiate a settlement with a company alleged to be in violation of the Motor Vehicle Safety Act.

Prior to the Act coming into effect, only a manufacturer could issue a vehicle safety recall in Canada, and Transport Canada was forced to use the courts to order manufacturers to pay for recall repairs.

In addition, the Act empowers Transport Canada to undertake more in-depth vehicle inspections and investigations into safety concerns, fine manufacturers that do not comply with regulations, and establish strict timetables for repairs. It also provides Transport Canada with greater flexibility to support technological innovation in the automotive sector.

While the new legislation provides for a maximum fine of $200,000 per violation of the Motor Vehicle Safety Act, Transport Canada has yet to develop regulations that will facilitate the use of fines.

The Act is expected to have broad legal implications for a number of participants in Canada's automotive sector - including dealerships, manufacturers, regulators and insurers.